Two Satyam directors K G Palepu and Vinod Dham resign

HYDERABAD: Two directors on the Satyam Board, Krishna G Palepu, a Harvard Business School professor and Vinod K Dham, described as the father of Pentium have resigned.

The Board, which has come under flak for poor corporate governance after it approved a controversial deal to buy two firms linked to the promoter B Ramalinga Raju for $1.6 billion, is now set to be recast. Raju today said that Satyam's board meeting on January 10 would take up the reconstitution of the board. "This will be an important item on the agenda", he said

Satyam's aborted acquisition bid has put the spotlight on the role of independent directors. The company's board now comprises of the Dean of the Indian School of Business School Mendu Rammohan Rao, former cabinet secretary TR Prasad and former Dean of IIT Chennai Prof VS Raju.

Palepu was a non executive director, while Dham is an independent director on the Board. The two have resigned just four days after Mangalam Srinivasan, a US-based academician and an independent board member quit as furious investors questioned Satyam's propriety in using its cash pile to buy two firms linked to promoter B Ramalinga Raju. This has put pressure on other independent directors to follow her example.

The board meet on January 10 will also discuss dilution of the promoter stake and measures to boost investor confidence.

Institutional investors led by Aberdeen Asset Management, Fidelity and ICICI Prudential, who hold 61% stake in Satyam, are closely monitoring the attempts at restoring investor confidence and the company credibility in the wake of the ill-conceived attempt to acquire Maytas Properties and Maytas Infra.

Satyam. which deferred its board meeting scheduled for today to January 10, had earlier said it is looking at various options to increase shareholders value which also include reconstitution of the board.

B Ramalinga Raju, company Chairman, said "Amongst other items that are being taken up for consideration in the board meeting scheduled on January 10, 2009, reconstitution of Board will be an important item."

However, the company said today that Satyam promoters have pledged all their shares to institutional investors, who may have sold a part of it to recover dues.

Earlier this month, Satyam announced the acquisition of two companies promoted by the family of Raju, but had to call off the deal within hours follwing investors' dissent.

The ADR of Satyam took a 55 per cent hammering after the company announced the deal on December 16.